Nutrient based subsidy policy – payment for indigenous P&K fertilizers

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What exactly is the Nutrient Based Subsidy Scheme?

The Nutrient Based Subsidy (NBS) Program for Fertilizers was launched in 2010.

The plan provides a defined amount of subsidy on each grade of subsidised Phosphatic and Potassic (P&K) fertilisers, save Urea, based on the nutrient level contained in them.

The plan is managed by the Department of Fertilizers, which is part of the Ministry of Chemicals and Fertilizers.

In a recent development, the Cabinet Committee on Economic Affairs accepted the Department of Fertilizers’ proposal to extend the Nutrient Based Subsidy (NBS) through 2019-20.

The continuance of the Nutrient Based Subsidy Scheme will guarantee that farmers have access to an appropriate supply of P&K at a statutorily limited price.

Union Budget 2021, as well as the Nutrient-Based Subsidy Scheme

The Nutrient Based Subsidy Scheme received no amendments in the Union Budget 2021. Despite the fact that Nirmala Sitharaman announced an additional Rs 65,000 crore for fertiliser subsidies over and beyond the Rs 71,000 crore allotted in the Budget for Fiscal Year (FY) 21 and FY22, she has provided close to Rs 80,000 crore.

Provisions for the Nutrient Based Subsidy Scheme (NBS)

Urea is the solely regulated fertiliser in India, and it is sold at a statutory announced uniform retail price.

  • The Nutrient Based Subsidy Scheme (NBS) permits producers, marketers, and importers to set fair MRPs for Phosphatic and Potassic (P&K) fertilisers.
  • In order to determine the MRP, the local and foreign costs of P&K fertilisers are evaluated, as well as the country’s inventory levels and the currency exchange rate.

The Nutrient-Based Subsidy Scheme’s Objectives

The NBS system has the following goals:

  • The scheme’s goal is to guarantee that a sufficient supply of P&K is available to farmers at legally controlled prices, allowing agricultural development to be sustained and balanced nutrient application to the soil to be ensured.
  • It seeks to ensure the balanced usage of fertilisers, improvement of agricultural production, promote the expansion of the indigenous fertiliser sector, and reduce the subsidy burden.
  • The Nutrient Based Subsidy Scheme was adopted with the intention that it will encourage balanced soil fertilisation, resulting in higher agricultural output and, as a result, better returns to farmers.

Subsidy Scheme for Urea and Nutrients

What really is urea?

As an animal feed ingredient and fertiliser, it is a white crystalline solid containing 46% nitrogen. It has a variety of applications:

  • It is utilised in agricultural production.
  • It is also used as a supplement to livestock feed.
  • It is beneficial to a variety of sectors, particularly those involved in the manufacture of plastics.

Why is Urea excluded from the Nutrient Based Subsidy Scheme?

According to recent reports, the Indian government intends to include urea in the NBS before implementing the Direct Cash Transfer (DCT) of urea subsidy in farmers’ accounts. The extent of landholdings and the health of the soil will be taken into account when determining the urea subsidy rate.

  • In 2012, the Sharad Pawar Committee suggested that urea be included in the NBS.
  • Currently, the government controls the price of urea by setting the minimum retail price (MRP).
  • Urea Subsidy – As per the Government of India, “the difference between the delivery cost of fertilisers at farm gate and net market realisation by urea units is paid as a subsidy to the urea manufacturer/importer by the Government of India.”
  • The New Pricing Scheme is only applicable to urea.

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